If you’re considering hiring a virtual CFO to manage your cash flow, expenses, and other financial components, you’re not alone. Businesses all over the world are discovering just how much good a part-time, virtual CFO can do for them.
But what is a virtual CFO and what are the top reasons to work with one? Let’s take a deeper dive into the benefits of a virtual CFO.
What is a virtual CFO?
A virtual CFO usually works with a company on a part-time basis. This person provides a variety of services related to financial KPIs, strategy, management, and more. These services may or may not include: financial planning, financial analysis, accounting, reporting, and legal & risk analysis. Ultimately, a virtual CFO’s role is to keep a company financially healthy and responsible.
How much does a virtual CFO cost?
According to a national recruiter’s 2021 salary guide, the national average salary for a full-time, experienced CFO is between $203,750 and $211,250. This is before benefits, bonuses, stock options, and cost-of-living adjustments. (For example, this number is 10-11% higher for CFOs in the DFW area.)
These are really big numbers, right? Especially when you consider that most companies below $80 million in revenue don’t always need a full-time CFO. This being said, before making such a large commitment, it’s important to explore the benefits of a fractional CFO.
A seasoned fractional CFO can typically handle all the CFO responsibilities for a mid-market company – but on a part-time basis. This usually involves around 20-40 hours a month.
In other words, you get all the benefits of a CFO – but at a “fraction” of the cost.
Some fractional CFOs bill on an hourly basis, while others bill on a retainer (which is calculated based on an assumed number of hours). The scope and fees are then reviewed periodically whenever a client needs to increase or decline monthly hours based on need.
What are the benefits of a virtual CFO?
There are a variety of business benefits associated with virtual CFOs, but let’s take a look at 5 of the most common reasons companies seek out virtual CFOs.
1. Virtual CFOs are well-versed
When you contract with a virtual CFO, you’re likely contracting with someone who has experience working with a variety of companies, in a variety of situations. And this is good news. You want to work with a virtual CFO who is capable of handling different types of financial situations with ease.
On top of this, virtual CFOs usually work in a team. If they get stuck, they likely have a collection of other CFOs that they can tap into – which means you have a team of CFOs.
2. Virtual CFOs keep you compliant
Part of a virtual CFO’s role is to make sure your company falls within industry regulations and standards. With regular, on-time reporting, filing, and more, a virtual CFO will use his or her experience and technical expertise to keep your company compliant at all times – whether this regulatory need involves employees, customers, clients, or all of the above.
3. Virtual CFOs save you money
A virtual CFO is traditionally contracted as a part-time, partially or fully remote, CFO. Companies who opt for a virtual CFO usually don’t need a full-time CFO (or can’t justify hiring a full-time CFO at the time). Not only is a virtual CFO typically less expensive than a full-time CFO employee, but they can create a contract for your company that’s exactly what you need (and nothing more). This means you can avoid paying for hours you don’t need or can’t afford, and you can save money in the process.
Keep in mind – as with any contractor, a virtual CFO also won’t require bonuses, benefits, or other incentives that full-time employees require.
4. Virtual CFOs help you plan
If you have no set financial expert or advisor within your company, it’ll definitely be much more difficult to plan for investments, big ideas, and future endeavors (like selling your business). Having a virtual CFO at your side who understands your business and its financials can mean the difference between a successful plan and a failed plan.
5. Virtual CFOs give you visibility
With regular reporting and insights, a virtual CFO can give you and your team the visibility it needs into the health of your business. As a result, your team can better understand where your business is at, where it’s headed, and where it can go. Ultimately, this means more control, more stability, and more success.
Interested in learning more about virtual CFO benefits?
At New Life CFO, we have decades of combined experience helping companies of all shapes and sizes better understand and manage their finances with virtual CFO services. If you’d like to learn more about virtual CFO benefits, we’d love to talk.
Give us a call or send us a message online to get in touch with our virtual CFOs.
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